Losing a loved one is a difficult time
Church & Hawes' guide to dealing with the sale of an estate.
When a loved one passes away, the loss felt can be overwhelming and dealing with the financial aspect can be confusing and difficult. It may be difficult to know where to begin. Below is a guide that may help steer you in the right direction.
Is there a Will?
Firstly, you will need to find out if there is a Will and locate it. A person’s money, possessions and property is referred to as their estate. If they left a Will, then this should specify how their estate is to be distributed.
A Will states who has responsibility for dealing with the deceased’s estate. This person is called an executor. Their role is to locate all assets, pay all taxes and debts, and distribute the remaining assets to the beneficiaries named in the Will. Depending on the value of the estate the executor may need to apply for a Grant of Probate which is the legal process of proving the Will.
What if there is no valid Will?
If the deceased person did not leave a valid Will, they have what is called 'died intestate'. There are laws, known as intestacy rules, governing how their estate should be distributed. Unmarried partners do not inherit anything under intestacy rules.
If there is no Will, the person dealing with the estate is called an administrator.
Obtaining the Grant of Representation (Probate or Letters of Administration)
It is often advisable to use a probate specialist, as dealing with the administration of an estate can take many months, depending on the complexity of the estate. If you think of doing it yourself, make sure you can cope with the demands on your time.
Also consider that as an executor or administrator, you must:
- Collect the assets
- Pay all liabilities including tax
- Correctly distribute the estate
You will be held personally liable for your actions as executor or administrator. If you are not confident doing this yourself, then consider using a specialist.
Unfortunately, family disputes about who should take what assets, whether to sell assets quickly or hold out for a higher price do happen. Using a probate professional can avoid this problem.
When is probate needed?
Probate is almost always needed when the deceased’s estate includes property or land.
There are circumstances when it is advisable to use a probate specialist. For example:
- The estate is over the Inheritance Tax threshold (currently £325,000) and is not exempt from tax
- There are issues with the validity of the Will
- There is no Will
- The estate holds trust assets
- The estate does not provide for a child or a partner
- The estate includes foreign property
- The deceased was not domiciled in the UK for tax purposes
- If disputes are likely to arise.
There are other expenses (like applying for the Grant of Probate) which must be paid up front, but which are all recoverable from the estate.
If you are responsible for administering the estate, it is important to correctly value assets. You should include all assets, so that everything owned at the date of their death including their property, personal possession, money, and shares etc. You must then deduct all liabilities, for example any mortgage, loans, credit cards, car finance, to arrive at the total figure of the estate for tax purposes.
Inheritance Tax
Inheritance Tax is paid at 40% on everything over the current Inheritance Tax threshold of £325,000 that is left to anyone other than a spouse or charity. It may be possible to claim additional exemptions for example, an allowance for children or grandchildren, agricultural land, or business assets.
Tax is a complex area and will differ depending on the circumstances of the estate.
For this reason, it is advisable to seek professional advice and Church & Hawes would recommend contacting local solicitors, Bright & Sons to discuss matters further with Daniel Curnock, daniel.curnock@brightslaw.com or Leigh Wetheridge, leigh.wetheridge@brightslaw.com 01621 852323. Finding the right probate specialist is sometimes difficult. There are many companies that offer estate services as do the banks. You need to carefully consider who you wish to appoint to assist you with administering the estate.
If you require a valuation for probate purposes, please contact Church & Hawes.
This information guide is designed to give you some basic information and it is important that you seek professional advice as mentioned above or CLICK HERE for further information.